Out-Law News 2 min. read

Competition rules need not disrupt NHS reforms, say experts


Competition rules are not fatal to the delivery of reforms within the NHS but the issues must be properly considered by decision makers, two experts have said. They added that there is no doubt the rules can increase transaction costs and carries the risk of delays in much needed transformation. 

Merger arrangements between some NHS Foundation Trusts are being seen as a way to adjust the configuration of services to new demands being placed upon the NHS and improve quality of care in certain specialties whilst cutting costs. However, NHS England chief executive Sir David Nicholson last week said that the reforms are being stifled because the NHS is "bogged down in a morass of competition law", the Financial Times reported.

Competition law specialist Jenny Block and health sector and infrastructure law expert Barry Francis, both of Pinsent Masons, the law firm behind Out-Law.com, said the requirements of the rules on procurement and competition law will not necessarily get in the way of change but that providers will have to show that alternatives to merger to address the underlying issues have been sufficiently assessed and the case in terms of patient benefits set out as fully as possible.

"Competition rules need to be thought through from the outset of the decision making process," Block said.

"It’s clear from recent decisions that providers seeking organisational change should not start out with the preconception that merger is either the only or best way to deliver the changes they require," Francis added. "This is not something that can be concluded unless there has been a full assessment of the alternatives."

Last month the Competition Commission (CC) banned the merger of two NHS Foundation Trusts in Dorset after expressing concerns about how the proposed deal would impact on competition and patient choice. The merger would have a detrimental effect across a number of elective specialties, maternity services and private inpatient cardiology services, the CC concluded.

In a joint statement at the time the CC, Office of Fair Trading (OFT) and NHS regulator Monitor emphasised the need for parties in future cases to provide a strong, evidence-based argument for a proposed merger and to set out their post-merger plans from the perspective of patient safety and quality of service.

"Full hospital mergers are just one way in which NHS restructuring can be achieved," Francis said. "Other options include the sharing of some, but not all, service provision between facilities, setting up joint ventures to ensure specific local or specialised care is available elsewhere, or to outsource aspects of health care to others."

"All the credible alternatives should be on the table at the outset of reform discussion with a full assessment made of not only their financial viability but also the impact those changes would have on the quality of patient services and patient choice," he said. "The process for assessment should include detailed consultation with local commissioners to gauge their concerns and seek to address them, as ultimately they are the ones who decide how NHS budgets should be spent."

The Health and Social Care Act 2012, which was introduced last year, gave the competition authorities a statutory role in the scrutiny of mergers involving Foundation Trusts. Monitor also has a role in the scrutiny of mergers under the terms of the Act, particularly in relation to providing advice on patient benefits.

Francis said that there is "a political argument that competition should not be a key feature of the NHS but it is and therefore it must be taken into account". He agreed with Sir David Nicholson that there is perhaps scope to relax some of the competition rules within the sector to ensure that account is taken of the specific characteristics of health care services, but since the rules apply, those seeking to deliver reform "cannot afford to ignore them".

"The NHS is not yet used to having to think about competition rules," Francis said. "There needs to be a change in culture so that the implications on competition are considered front and centre by those developing plans and proposing changes within hospital structures."

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.